Does it really matter who wins the race to LTE in MENA?
We at Informa have been closely tracking developments on the LTE front in the Middle East. One week ago, it had not launched commercially in the region. But with five operators (Mobily, Zain Saudi, STC, Etisalat and du) having expressed interest in being credited as the first launcher of LTE in the region, I could see the potential war-of-words over the ‘photo finish’ coming from a mile off.
And that is precisely what has just transpired. Just a couple of days ago, Zain rushed in to tweet (in Arabic): “For the first time in the Kingdom and the Middle East, Zain brings superfast Internet with 4G LTE technology”, coupled with a banner of a Zain-branded train whizzing past. Mobily for weeks now has been on the verge of its own LTE launch; yet Mobily released a casually modest announcement yesterday stating “Sorry, we kept you waiting, but we are the first in the Middle East – Connect 4G,” – in relation to its fixed-WiMAX Broadband@home packages (and not LTE)! To make matters complicated and the picture even more blurred, STC swooped in by publishing a banner of a 4G LTE thundercloud, adding that its customers can now enjoy LTE in 400 locations in the Kingdom. All these claims seem to be a fancy PR battle aimed to confuse the uninitiated.
Without any real LTE offers on the table available to customers, none of the three really has any real legitimacy to what is the short-lived prestige of first-to-launch, and the PR battle seems to be opportunism on the part of the operators.
With each of the three operators having already duped the masses into thinking it is the first to launch LTE, it is clear what message the Saudi’s mobile-industry insiders are sending: in the mobile segment, with voice-based revenues already stagnating and penetration reaching 180%, future growth will come from superfast data access.
It should also be noted that Mobily is not deploying the preferred FDD variant of LTE, but rather TD-LTE. The other two operators, STC and Zain, have expressed their desire to pursue FDD-LTE, which remains a problem as this frequency is currently being used exclusively by the Saudi military. Given that is the case, TD-LTE might be the only gettable option for the operators for the time being.
Unexpectedly, on the other side of the border, Etisalat altered its marketing message to push back the launch of LTE to end-2011 (which surprisingly enough was not down to a technical issue). This left the window open for the Saudis (du has gone somewhat silent in this regard) to vie for what the coveted title of the moment, evidenced by the noise that we have heard coming out of the Kingdom in the past couple of days.
Unlike previous mobile broadband evolutions and fixed broadband, LTE is receiving early adoption in the region – much quicker in comparison to the other highly-penetrated telecoms markets in the world. With Etisalat having forced the industry to recognise it as the undisputed queen of fiber (thanks to its phenomenally expensive and rapid rollout), rival regional operators were keen not to lose this one-off opportunity to win the enviable title of “the first operator to commercially launch LTE.” This was also a chance for an alternative operator to be first to get to market with 4G LTE service, which will be somewhat of encouragement for fellow alternative operators in the region that is largely dominated by the incumbents.
Despite the above, there is no escaping from the fact that whichever operator is the winner of this mini-competition, its achievement will last for only a very brief period before it is all but forgotten. Beyond the intoxication of (and perhaps obsession with) the “earliest LTE adopter” title, it will the likes of coverage, customer experience, service take-up and net growth that will dictate the scope of success or the lack of it in LTE.
Middle Eastern markets vary quite more differently in their demographics than, for say, Western Europe. This is taking into account the mini- versus micro-geographies factor, the GDP per capita element, the socioeconomic nature of market and economy, and the number of people who are actually interested in mobile broadband.
So whereas the likes of the UAE, Qatar and Bahrain can achieve broader nationwide coverage with relative ease, it is a tougher ask for Saudi. Barring Qatar and the UAE, 3G prices remain prohibitive for large segments of the population. An outgoing young tech-savvy populous, combined with a mobile workforce (propelled by economic and business travel) can actually solidify the fortunes of mobile broadband – the UAE is a prime example where LTE can flourish due to its fluid business population and outgoing tech-savvy youth; it is a question mark for other markets like Saudi Arabia.
The measure of success in LTE will not lie in how well it performs against neighboring markets or regional operators. It will rather be in LTE’s ability to live up to its high expectations in the context of each specific market – customer experience and service take-up, net growth and potential to drive down prices, competition – if any – with fixed networks, and the ability to overcome local obstacles and economic challenges.
And it is therein where the business focus should be. Yet, these four or five operators can be forgiven for having tried to satisfy this urge of theirs, which they themselves know very well it will not really mean anything in the bigger schemes of things, especially for customers who are more sophisticated and savvier than ever before. And that is why the current PR battle in Saudi Arabia is nothing but verbal gymnastics that has little worth in the bigger scheme of things.